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Archives | (July 2003)
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The Prescription Drug Benefit: Boon or Boondoggle? (cont.)
------------------------------------------------------------------ Page 4 of 6 McGrath noted that since individual consumers are required to make a 20% co-payment based on the AWP. If that price is inflated, then their co-payment is correspondingly higher – and the amount of the overcharge is often significant. In an exhibit accompanying legal documents filed in the suit, a chart listed the amount of the 20% co-payment required of consumers – which is based on the AWP – and the REAL wholesale cost of the drug. In instance after instance, the co-payment was often more – sometimes substantially more – than the ACTUAL wholesale cost. So the low-income consumer was actually paying what should be the full price, and with the drug company pocketing the state’s reimbursement as pure profit! Take, for example, Leucovorin, which is used in conjunction with the chemotherapy drug Methotrexate to counteract some of its side effects. The wholesale price of Leucovorin is $1.48 per 50mg dose. The price charged to Medicare on the basis of the AWP, however is $19.50 so that the consumer has a $3.90 co-payment for each dose. The co-payment is more than twice the wholesale price! The price gouging for the chemotherapy drug Etoposide is even worse. The wholesale price for a 100mg dose of Etoposide is $7.50. The allowable reimbursement under Medicare, however, is $129.34 per dose. Therefore the consumer is required to make a co-payment of $25.87 – almost three and a half times the wholesale price! The magnitude of the problem cannot be overstated. One study estimated that if the federal government were more aggressive in its price negotiations, it could reduce outlays for Medicaid and Medicare prescriptions by at least one-third! If in administering a prescription drug benefit, the government allows the same sort of abuse to occur, costs could skyrocket and ultimately much of the burden could fall on the seniors who it was supposed to help! As currently designed, and including the monthly charge for the benefit and co-payments, under the drug benefit plan proposed by the House of Representatives, beneficiaries would be liable for up to $4,220 per year for prescription drugs. Under the Senate’s version, they would be liable for up to $4,300 annually. But both of those figures assume that neither the deductible nor the co-payment is increased. If the recent experience with private insurance is any measure however, it is highly unlikely that the co-payments will stay where they are. |
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